Mao prepared China for Capitalism

THIS year marks the birth centenary of Mao Zedong. China still pays lip service to the ideals of Mao. But the truth is that the special form of capitalism created by Chiang Kai Shek is now sweeping China. In the military field, Mao defeated Chiang decisively. But in the economic field, Chiang is posthumously beating Mao hollow.

Still, Mao will always be remembered for two great achievements – re-establishing the moribund Chinese state and perfecting guerilla warfare.

China had decayed during the Qing dynasty, and for half a century after the end of that dynasty in 1912, suffered anarchy, warlordism, civil war, and invasion by the Japanese. History has shown repeatedly that few things are worse for a country than civil war, and anarchy. Muscle reigns supreme, no investment or economic activity is safe, and pillage becomes the only profitable activity.

Mao ended half a century of anarchy by military victory. But his triumph was not based on superior arms. On the contrary, he beat the better-armed Chiang by winning over local people and using them as allies in guerilla war. His revolutionaries swam among peasants like fish swimming in water, and so could not be spotted and liquidated by Chiang. Mao’s tactics revolutionized warfare and made it possible for poor rations to beat the greatest military powers in the history of the world. The American debacle in Vietnam and the Soviet debacle in Afghanistan owed much to the lessons Mao provided earlier in China. If military powers are humbler today than ever before in history, Mao must get some of the credit for it.

MAO EXTOLLED: He has been extolled for decades in India for a totally different and false reason. He has been praised as the man who brought prosperity and dignity to China. His communist system provided an “iron rice bowl”, ensuring all Chinese a basic level of subsistence. This was hailed in the 1950s as a major achievement.

In the 1990s, we know this was not so. There are four Chinas, not one. Taiwan, Hong Kong and Singapore are three Chinese countries which followed very different paths, and Mao’s China was a monumental failure compared with all three. These three are now richer than European countries like Greece or Portugal, while Mao left China struggling with a per capita income of 300, just one-twentieth the level in the other three Chinas.

Not even workers and peasants were better off in Mao’s China than in the other three. Taiwanese workers earned ten times as much as Mao’s. Incomes were equitably distributed in the three other Chinas. The top 20 per cent in Taiwan earned just five times as much as the bottom 20 per cent, an egalitarian outcome comparable with Hungary and Yugoslavia in the Brezhnev era. Mao succeeded in distributing poverty evenly, but failed quite miserably to make his people prosperous. It is now clear that increasing the size of the economic cake rapidly (like Taiwan) yields far more to all classes than equitably dividing a slow- growing cake. Mao killed at least 3 million people to establish his supremacy (Taiwan puts the death toll at nearer 37 million). But the other three Chinas achieved much greater prosperity without shedding rivers of blood.

ECONOMIC MIRACLE: The real irony is that Chiang, who failed so badly on the mainland, blossomed into a superstar once he was confined to Taiwan. His success was initially ascribed to US aid, but that aid soon stopped and yet he presided over an unending economic miracle. Unlike the South Koreans, he welcomed multinational investment. His was by no means a laissez faire economy – it had many controls on interest rates, imports and capital markets. But it was market-friendly and outward-oriented, and in due course became so rich that it had the second largest foreign exchange reserves in the world, next only to the USA.

While Chiang presided over a miracle, Mao led China to disaster. His great leap forward in the 1950s was an agricultural fiasco, and we now know that almost 30 million people died in famines, six times as many as died in Hitler’s gas chambers. Mao kept this a secret, but history will not forgive him (though Left reactionaries in India doubtless will). He followed with his Cultural Revolution, which devastated culture and the economy till his death.

On taking over, Deng Xiaoping wanted to acknowledge Mao’s historical contribution even while reversing his latter-day stupidities. The solution was to blame all the stupidities on the gang of four (Mao’s old colleagues), not Mao.

‘TAIWANISATION’: But even while paying lip service to Mao, Deng set his country on the path, followed by Chiang in Taiwan. The foreign investment that poured into China was over whelmingly from overseas Chinese, not Americans or Europeans. Taiwanese and Hong Kong businessmen married their for midable knowledge of global markets and finance to cheap Chinese labour, producing a world-beating combination. The Taiwanisation of China is still in progress, and promises to make it the economic superpower of the 21st century.

Many supporters of Mao claim that Deng’s success would not be, possible but for the rural infrastructure and educational system created by Mao. Maybe so, but this reflects poorly on Mao’s intellect. The poor chap thought he was creating a great communist state. In fact he was unwittingly laying the foundations of a great capitalist power.